Matilda Zircon

Summary
Matilda Zircon is focused on the development of mineral sands projects located on the Tiwi Islands in the Northern Territory, a leucoxene deposit at Keysbrook in the South West of Western Australia and an expanding zircon operation in Indonesia.

Zircon producing and exploration assets form a key part in the Company’s commodity investment strategy. The strategy is to focus on low capital and operating cost projects and which are located within close proximity to the Chinese and Indian markets.

Zircon has a broad range of applications; its hardness makes it useful as an abrasive and with a melting point of over 2500º C zircon products are resistant to corrosion and heat. Approximately 54% of the world’s premium grade zircon is used as the rapidly growing application of ceramic glazes commonly used in kitchen and bathroom ceramics and dinnerware. The Asia Pacific region dominates zircon consumption accounting for 45% of the total in 2005. China is a major consumer with its booming construction industry increasing the demand for this product.

Zircon prices have increased to over US$900 per tonne in 2009 and are predicted to exceed US$1000 per tonne in 2010/11. During the 2008 downturn in commodities zircon and gold were two of the few minerals which actually increased in value.

Tiwi Islands Project

The Tiwi Islands are located approximately 50km north of Darwin, a 25 minute air flight and consist of Melville and Bathurst Island.

The Tiwi Island zircon project includes a complete 150tph wet plant and all supporting equipment and infrastructure. The project has historically produced 46,000 tonnes of zircon concentrate grading 50% zircon and shipped zircon concentrate to China in 2008.

In contrast to the traditional mineral sand companies which produce lower-value ilmenite and zircon as a by-product, the Tiwi Island project produces high-value zircon and rutile-rich concentrates. Previous and current exploration shows impressive zircon and rutile grades in the heavy mineral suite of a number of deposits.

Matilda has commenced mining at the Tiwi Island Project with a target to produce 40,000 tonnes of zircon/rutile concentrate.

Matilda has finalised a US$2.5million funding package with Hong Kong based mineral sands processor and distributor Tricoastal Minerals Holdings. As part of the zircon agreement, Tricoastal will market 100% of production from the Tiwi Project.

Keysbrook Leucoxene
The Keysbrook Leucoxene project is located approximately 70 kilometres south of Perth, Western Australia.

Keysbrook has Reserves of 41mt at 2.7% to produce 1.2mt HMC comprising Proven Reseves 39mt at 2.7% HM and Probable Reserves 2mt at 2.6% HM. The Keysbrook deposit has an unusual heavy mineral suite which contains 49% leucoxene. The mineral leucoxene contains approximately 92% TiO2 and is used in the manufacture of welding electrodes as well as feed stock for titanium pigment plants. In addition to leucoxene the Keysbrook heavy mineral suite contains 11.1% zircon, 20% ilmenite and 14.5% high titanium ilmenite.

Keysbrook is a shallow surface dunal deposit averaging two metres in depth. The mineralisation is in clean yellow sand similar to building sand. There is no overburden and clay quantities are low. The deposit is situated on farming land which is largely cleared of vegetation. Mining is straightforward using a digger and trucks. Processing will be carried out using proven technology. The Keysbrook feasibility study indicates a net operating cash flow from the Keysbrook project of $5 - $10 million per year over the 8 year mine life.

Matilda has received Environmental Approval for the development of its Keysbrook leucoxene project. It is proposed to commence production in early 2011.

Matilda has a leucoxene off-take agreement with DuPoint (USA).

Kalimantan Zircon

Central Kalimantan is covered by a large sedimentary basin, the Barito Basin. This basin contains placer deposits of zircon and gold over a large area. Gold mining has been carried out in Kalimantan for centuries and is still being undertaken. The value of the contained zircon was not properly recognised until the last five years when mining started on a wide scale by artisan miners who sold zircon as concentrate into China.

A feature of the Kalimantan zircon is that it is one of the highest quality zircons produced in the world. It is very suitable for the high quality ceramics market. Most Kalimantan zircon is sold into the Chinese market with some sold into India and other Asian countries.

In 2007 Matilda commenced an exploration program in Central Kalimantan with the aim of establishing mining and processing operations. This exploration confirmed the prospectivity of Central Kalimantan for zircon mineralisation.

In late 2007 Matilda was offered the opportunity to purchase a partly completed zircon processing plant at Sampit in Central Kalimantan. This plant was relatively low cost at USD$535,000 and gave Matilda a base in Kalimantan to develop its exploration program as well as having the potential to produce a modest cash flow from producing zircon from concentrates produced by the artisan miners. Matilda took the opportunity to purchase the plant and it commenced operation in February 2008.

The key to future continued success for Matilda in Kalimantan is to locate and develop mining operations that the Company owns together with processing concentrates. To this end Matilda has negotiated a Joint Venture with Indonesian partners. These partners will bring tenements to Matilda to explore and potentially mine as well as carrying out the important task of obtaining all necessary approvals and licences. Matilda will do what it does well i.e. exploration, mining, processing and marketing of zircon.

Matilda believes that with adequate access to explore and a JV partner who can obtain all approvals in a timely manner there is a good potential for Matilda to find a suitable zircon resource to establish a profitable mining and processing operation. This operation will produce world’s best quality zircon which will be a product of choice for buyers and will command premium prices.

Further information on Matilda Zircon can be found on www.matildazircon.com.au.